Why the Kinetiko (ASX:KKO) share price is surging 18%

The Kinetiko Energy Ltd (ASX: KKO) share price is rocketing as the company announces it has acquired 100% of a South African gas project.

| More on:
Man in mining hat with fists raised and eyes closed looking happy and excited about the Newcrest share price

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Kinetiko Energy Ltd (ASX: KKO) share price is rocketing today. At the time of writing, shares in the gas explorer, based in Australia and operating in South Africa, are trading for 13 cents – up 18.18%.

Today's price rise comes as the company announces it has acquired 100% of a South African gas project.

Let's take a closer look at today's update.

What's up with the Kinetiko share price?

In a statement to the ASX, Kinetiko says it has acquired "the remaining 51% of Afro Energy (Pty) Ltd, making [Kinetiko] the 100% owner of all South African exploration rights and production approvals." The previous joint-owner was Badimo Gas.

Afro Energy was founded 6 years ago as a joint venture between Kinetiko and Badimo. Kinetiko claims the ownership model was affecting the efficiency of the business and "causing delays in exploration and development programs." The company believes these inefficiencies will be eliminated by the takeover. Investors seemingly agree, judging by the huge jump in the Kinetiko share price today.

Kinetiko will issue Badimo 595 million shares in its company in exchange for its share in Afro Energy. The statement also says the sale is at a discount due to debt owed to Kinetiko. Badimo will own 46% of share capital in Kinetiko once the transaction is completed, according to the company.

The deal is conditional on the following:

  • Afro Energy holding 100% of the exploration rights at the Amersfoort Project.
  • Kinetiko receiving ministerial consent for the purchase, under South African law.
  • Meeting additional regulatory approvals and receiving adequate tax advice.

Management commentary

Kinetiko executive chair Adam Sierakowski said:

This union between the historic joint venture partners represents the achievement of a major milestone for the de-risking of the development of what is potentially the largest on shore gas project in South Africa. Years of significant cooperation between the Badimo and Kinetiko teams have enabled this acquisition to be realised and will result in delivering substantial shareholder value.

Badimo Gas executive chair Don Ncube added:

We have worked for over a decade to explore and develop a significant onshore non-fracking gas project in the Mpumalanga, Orange Free State and Kwazulu-Natal regions of South Africa. The creation of a project which delivers abundant clean energy will greatly assist South Africans whose economy faces an energy crisis.

This merged entity will now be able to raise capital for accelerated exploration, production and downstream development in international markets. Such foreign direct investment was previously not available to Badimo and this merger facilitates and reinforces the foreign direct investment initiative of our President. It will provide new employment opportunities and development of technical skills in the regions where such gas production is established. It will also contribute to the reduction of harmful polluting carbon dioxide emissions.

Kinetiko share price snapshot

Over the past 12 months, the Kinetiko share price has increased by an amazing 233%. It reached a 5-year record of 16.5 cents in December last year.

Kinetiko has a market capitalisation of around $65 million.

Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Resources Shares

a sad looking engineer or miner wearing a high visibility jacket and a hard hat stands alone with his head bowed and hand to his forehead as he speaks on a mobile telephone out front of what appears to be an on site work shed.
Resources Shares

Down 14% in 2024, why is the BHP share price sliding again today?

ASX 200 investors are bidding down the BHP share price on Wednesday.

Read more »

A mining employee in a white hard hat cheers with fists pumped as the Hot Chili share price rises higher today
Resources Shares

These ASX 200 mining stocks could rise 40% to 50%

Analysts think these miners are dirt cheap at current levels.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Resources Shares

Fortescue share price leaps 5% as electric machinery makes a milestone

Fortescue is charging ahead with its electric mining ambitions.

Read more »

rising mining asx share price represented by happy woman miner in hard hat
Resources Shares

Why the BHP share price crushed the benchmark this week

BHP shareholders enjoyed a rewarding week.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Dividend Investing

Here is the profit forecast to 2026 for BHP shares

Let’s unearth how much profit this miner could make.

Read more »

Female miner standing next to a haul truck in a large mining operation.
Resources Shares

Is the worst of the selling now over for ASX iron ore shares?

ASX iron ore giants like BHP, Rio Tinto and Fortescue rebounded this week after falling hard in 2024.

Read more »

Three satisfied miners with their arms crossed looking at the camera proudly
Resources Shares

Why are ASX 200 mining shares smashing the benchmark on Wednesday?

Rio Tinto, BHP and Fortescue shares are all charging higher today.

Read more »

Two miners standing together.
Resources Shares

Why is the South32 share price getting battered today?

ASX 200 investors are bidding down South32 shares today.

Read more »